Connecticut hospitals hold steady as insurance mandate ends

By Paul Schott

Published
12:00 am EST, Sunday, January 21, 2018

Stamford Hospital Chief Operating Officer Kathy Silard discusses the hospital's outlook for 2018, after Congress' repeal of the individual mandate and the passage of the state budget last year, at her office in Stamford, Conn., on Tuesday, Jan. 16, 2018. less

Stamford Hospital Chief Operating Officer Kathy Silard discusses the hospital's outlook for 2018, after Congress' repeal of the individual mandate and the passage of the state budget last year, at her office in ... more

Stamford Hospital Chief Operating Officer Kathy Silard discusses the hospital's outlook for 2018, after Congress' repeal of the individual mandate and the passage of the state budget last year, at her office in Stamford, Conn., on Tuesday, Jan. 16, 2018. less

Stamford Hospital Chief Operating Officer Kathy Silard discusses the hospital's outlook for 2018, after Congress' repeal of the individual mandate and the passage of the state budget last year, at her office in ... more

Change has become a constant for southwestern Connecticut’s hospitals.

They now face the end of the individual mandate, a critical component of the 2010 Affordable Care Act requiring insurance coverage, which was repealed as part of the Congressional tax reform passed last month. Hospital executives are concerned the mandate’s demise could complicate health care delivery, but they see their experience in recent years adapting to the ACA and ongoing financial pressures as reason to believe they will adjust to the latest shift.

“We will be able to manage the uncertainty — and that’s what we’ve managed to do well over the last five to six years,” said Vin Petrini, senior vice president of public affairs for the Yale New Haven Health System, which includes Bridgeport, Greenwich and Yale New Haven hospitals. “There’s a lot of volatility, so our goal is to smooth it out.”

Treating the uninsured

Areas hospitals said they have so far not made any major changes in response to the dismantlement of the mandate.

First, they will study the impact of the change. The effects will initially be mitigated by the state maintaining for this year the mandate’s penalty for not carrying insurance. The deadline closed last month for 2018 enrollment in the state’s health insurance exchange, Access Health CT.

“We’re not going away; we service the community,” said Kathleen Silard, Stamford Hospital’s chief operating officer. “We will continue to provide that service.”

But Silard and other hospital leaders have hardly cheered the repeal, a move Senate Majority Leader Mitch McConnell has described as “taking the heart out of Obamacare.”

“The repeal is disappointing,” said Dr. John Murphy, president and CEO of the Western Connecticut Health Network, which includes Danbury, New Milford and Norwalk hospitals. “Our mission is to improve the health of people who live in our communities. One of the ways we think we can do that is providing more people with insurance, which provides better and more timely access to health care.”

Now, the loss of the mandate raises the specter of hospitals having to treat more uninsured patients. Ending the insurance requirement will increase the number of uninsured nationwide by an estimated 4 million in 2019 and 13 million in 2027, according to the nonpartisan Congressional Budget Office and Joint Committee on Taxation.

Hospital officials are also concerned that jettisoning the insurance requirement will adversely affect insurance pools.

“When individuals opt not to get insurance, it tends to be more the well and the younger people, and those that secure insurance may have a preexisting condition,” Silard said. “That is going to create risk pool disproportions. As a result of that, premiums may go up.”

But even with the mandate, hospitals still faced significant expenditures for uninsured and underinsured patients. Undocumented residents, for instance, have never been covered by the ACA. Meanwhile, many insured patients face high deductibles and premiums and struggle to pay for their care.

Stamford Health, the system that includes Stamford Hospital, incurred in the past fiscal year about $30 million for charity care. In the 2016 fiscal year, WCHN’s charity care cost about $22.4 million, while Yale New Haven Health System paid for about $273 million worth of charity treatment.

Throughout Connecticut, uncompensated care accounted for about 2 percent of hospitals’ expenses from 2013 through 2016, according to a report last year by the state Department of Public Health.

“With the mandate, there really was not much that change here in Connecticut in terms of people seeking out health coverage,” said Stephen Frayne, the Connecticut Hospital Association’s senior vice president of health policy. “We’re not expecting much change for 2018. If folks begin to back away from coverage, we could see some deterioration. But it’s too early to tell.”

Watching finances

Separate from the ACA, the state introduced in 2012 a tax on hospitals’ net revenues, a levy supposed to help Connecticut qualify for more federal matching funds and cover the ACA’s expansion of the Medicaid-insured population.

Executives said their organizations have hardly recouped their tax payments in the past few years as the expected reimbursements have been targeted as funds to mitigate state budget deficits.

“We believe the hospital tax needs to operate in Connecticut like it does in other states — by that, I mean the taxes should be used to leverage federal funds to help hospitals, not hurt them,” Murphy, of WCHN, said. “In this state, the tax is a burden. It does not help us to provide the care we want to provide to the expanded Medicaid population.”

In the past fiscal year, WCHN’s state tax bill amounted to approximately $55 million. The state returned only about $8 million. Stamford Health paid nearly $29 million in state taxes in the past fiscal year, while it received back about $2.7 million. Yale New Haven Health System paid $200 million in taxes; it recouped some $27 million.

Hospital officials, however, are encouraged by the two-year state budget belatedly passed last October. Compared with last year, it would shrink the annual deficit between hospitals’ state tax bills and their reimbursements by nearly half, to about $229 million, according to Connecticut Hospital Association data.

To be enacted, the new funding formula needs to be approved by the U.S. Centers for Medicaid and Medicare Services.

“The new numbers are a positive,” Frayne said. “But one of the negatives on the horizon is the state budget is still not out of the woods.”